Abstract
This paper proposes systemic power relations of industry associations as an indicator of the innovation potential in market fields. With this, we aim to advance the design of industrial policies towards normative directions such as a circular bio-economy, which requires the creation of market categories as leverage points in industrial sectors considering the micro-dynamic processes of market innovation as well as their structural embeddedness. Using the illustrative case of the German wood-based sector, we depict power relations of industry associations comparing a dyadic and a systemic perspective. Given the resulting differences, we argue that a systemic perspective that considers the structural embeddedness of industry associations’ power relations can better reveal potential innovation dynamics in industrial sectors. Based on systemic power relations, we propose three ideal-types of market structures to categorize markets with different innovation potentials to aid the identification of leverage points for governance interventions in industrial sectors.
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